Manufacturing News

China April retail sales register strong growth

China's retail sales in April grew 13.6 percent from a year earlier, providing further evidence to economists that Beijing is having some success in shifting growth away from an over-reliance on investment and exports.

BEIJING, May 15 (Reuters) - China's retail sales in April grew 13.6 percent from a year earlier, providing further evidence to economists that Beijing is having some success in shifting growth away from an over-reliance on investment and exports.

The figure, released by the National Bureau of Statistics on Monday, followed annual sales growth of 13.5 percent in March and surpassed economists' expectations of a 13.0 percent rise.

"I think stronger consumption will be an important positive aspect of the economy as the authorities have been trying to rebalance domestic demand, particularly between consumption and investment," said Yiping Huang, chief China economist at Citigroup in Hong Kong.

"Our broad expectation is that consumption will probably be the relatively more resilient component of GDP going forward compared to the expected moderation of both exports and investment activity."

Authorities, keen to reduce the economy's exposure to shifts in investment and demand in overseas markets, have used measures such as tax breaks for farmers and a doubling of the personal income tax threshold to stimulate consumption.

To deter saving and encourage spending, the central bank kept its deposit rate unchanged at 2.25 percent when it raised its lending rate on April 27, to 5.85 percent from 5.58 percent, after a spurt in annual gross domestic product growth to 10.2 percent in the first quarter.

Qu Hongbin, chief China economist with HSBC in Hong Kong, said the retail sales numbers were encouraging but stressed that there was still a long way to go in reorientating China's economy to be more consumption-driven.

"Retail sales remain strong, but they are still well below the growth rate of fixed-asset investment, so on the whole issue of rebalancing growth from investment-led to consumption-led, a lot still needs to be done," Qu said.

China posted a $10.46 billion trade surplus in April, maintaining a trend of strong export growth that is likely to fuel further U.S. calls for the yuan to rise faster.

The central bank on Monday set the yuan's mid-point at 7.9982 versus the U.S. dollar, the first time for it to rise past 8 per dollar since it reformed its currency regime last July.

Not only would further strengthening in the yuan temper China's politically sensitive exports by making Chinese goods more expensive abroad, economists say, but it would also make imports relatively cheaper, providing a further boost to domestic consumption.

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